What's in your stocking: Checks, credit cards or cash?

If you’re giving money this holiday season, be sure you’re giving it in the most secure way — the “right” way might surprise you

Kathryn Tuggle
by Kathryn Tuggle, Editor

From cash or check to cash card or bank transfer, there are many ways to give monetary gifts this holiday season, but what’s the best way to give green? Experts weigh in on the safest most affordable ways to say “Happy Holidays” with money.

Checks

Advantages: No fees, ability to see when someone cashes it, only the person listed on the check can cash it. 
Disadvantages: The recipient has to have a checking or savings account.

“It could be difficult for your recipient to cash if he or she doesn't have a checking account and cannot get to the bank,” says Gerri Detweiler, personal finance expert for Credit.com.  “Also, if the recipient doesn't cash it right away and you forget about it, it could potentially cause you to overdraft your account.”

With that said, it’s nice having the ability to know exactly when your gift gets cashed, and as long as you don’t go around making out blank checks, your checks can only be cashed by people on your “nice” list.

READ: The history of the checking account

Cash

Advantages: No fees, can be used almost anywhere. 
Disadvantage: Can be more easily lost or stolen and can’t be sent electronically.

“You have no influence over how cash is spent,” says Detweiler. “If it’s lost or stolen, it’s gone. And I wouldn't recommend sending cash through the mail.”

Even though cash can be a little impersonal, it’s certainly one-size-fits-all. Also, you can get creative when giving cash. If you’re giving someone $50, go get it all in $1 bills and put it in a box — the recipient will feel like a millionaire.

When it comes to giving cash to kids, having money can be a great lesson in responsibility. Consider giving them cash in different increments so they can learn about counting and saving, or give them a ready-made place to start saving — put their money in a piggy bank before you give it to them.

READ: What can I do if a payment doesn't show up on my credit card statement?

Store Gift Cards

Advantage: You get to choose the store.
Disadvantage: They may charge inactivity fees after the first year; the card could go unspent.

“Retail gift cards are protected under consumer laws and cannot expire for five years after issue date,” says Andrea Woroch, consumer saving expert and founder of AndreaWoroch.com.

If you want to protect the recipient against loss or theft, Woroch advises registering the gift card before giving it. 

“Before you buy a gift card, ask the retailer if they will re-issue cards that have been lost or stolen,” says Brad Wasz, founder of CouponTrade.com.  “Ask what credentials you’ll need to have your gift card replaced once it’s been lost.”

Vincent Turner, CEO of Planwise.com, an online personal finance directory, says gift cards are great because they can be used once the holidays are over.

“Recipients can use the full value of the card after the holidays when price gouging isn't as much of a concern,” Turner says. “They can go nuts on the post-holiday markdowns.”

INFOGRAPHIC: How much money can I save by brewing my own beer?

Single Use Prepaid Gift Cards

Advantages: More flexibility than gift cards for particular stores
Disadvantage: Some gift cards may charge a fee for issuance and they may charge fees for inactivity after the first year.

“A general gift card issued by a major credit card company can be used anywhere — at the movies, gas station or for purchasing a flight,” says Woroch. “The recipient has the power to purchase whatever they want, whenever they want.”

One of the problems with prepaid cards (much like gift cards) is that if you lose it, it's hard to have it replaced, says Wasz.

“It’s as good as cash,” he says.

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Gift Card 411 from Don Batsford, retail industry expert and co-founder of ShopGala.

  • With an e-mail gift card through Amazon.com, you can check to see if the recipient has redeemed the credit.
  • Modern Gift Cards can be emailed right into someone's inbox moments after being bought. While the flexibility of choosing what one really wants can save a loved one from having to send time returning gifts after the holidays.
  • The most popular gift card options are those with easy redemption. For example, Target, Macy’s and Starbucks gift cards can all be redeemed online or in-store.
  • If you’re giving a physical gift card, don’t forget to write the amount on the card itself. After to the holidays have passed people will forget the amount of each card in their wallet. Even if you have to write $50 in magic marker on the front of the card, make sure you label it!